Explain Like I'm Five

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ELI5: Why is high frequency trading allowed? (lemmy.ca)

submitted 2 months ago by [email protected] to c/[email protected]

34 comments fedilink hide all child comments

I don't see how it's a benefit to capitalism or companies or, well, anyone, really, to allow people to make thousands of trades a day for minute profits on each.

My gut feeling is that the stock market would not suffer, and less resources would be wasted, if trades and updates to stock prices were limited to, say, one batch per hour.

There are probably reasons the system is the way it is though.

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[–] [email protected] -5 points 2 months ago (2 children)

Thank chatgpt

Now tell me how payment for order flow works.

Also, let's discuss market marker exemtion to short sale rules while you are at it.

What happens if market maker fails to deliver shares?

If the market is so competitive why is control few a few big players?

[–] [email protected] 9 points 2 months ago (1 children)

Thanks but im not chatgpt

Few players bc they invested in the big machines.

Same reason few players manufacture rocketships- its difficult and expensive

[–] [email protected] -1 points 2 months ago (1 children)

As a sidenote, it would be great if superstonk went to lemmy.

[–] [email protected] 1 points 2 months ago

Handlers prefer reddit for obvious reasons